It is just a crappy Intel graphic card. Yeah, I played Portal from start to finish on it (through Vista), it got a little laggy sometimes, but nothing unbearable. And like I said, though crossover it worked (when it worked) perfectly, even with the graphics settings maxed out. HL2: Episode Two ran smoothly as far as load times and movement went, the graphic and textures were just glitchy enough to make it not any fun to play.
HL2: Ep2 has huge outdoor environments, the requirements for HL2 and HL2:Ep1 are considerably lower.